The prices of the most followed commodities (mining and energy) are bullish. Silver and gold prices have been strong since the beginning of 2016, while oil prices have been on an upward trend since the middle of February. Investing in commodities is about speculating on the future. As a result, commodity investors are focused on where the markers are going to be three to five months from now.

When you buy a stock, you invest in the company at a set price hoping it goes up in value in the future. With commodities, you speculate on what the asset will be worth at a specific time in the future. That’s why commodities are also referred to as “future’s trading.” And that’s why those who invest in commodities need to pay close attention to where the markets are going to be in at least the next three to six months.

Expectations for the just-completed first quarter are not good. In the first quarter, the expected earnings decline for the S&P 500 is -9.3%. At the start of the first quarter, the growth rate was projected at 0.7%. If the S&P 500 reports a decline in earnings in the first quarter, it will mark the first time the index has seen four consecutive quarters of year-over-year declines in earnings since Q4 2008 through Q3 2009.1

And the future isn’t looking bright, either. For the second quarter, the earnings decline estimate is -2/7%. Most analysts don’t expect earnings growth to return until the second half of 2016. But they also thought earnings growth would return in the second half of 2015.

The weak economic projections have helped lift some of the more closely followed commodities—namely silver, gold, and oil—higher.

Outlook for Most Watched Commodities

Gold

Aside from being used in jewelry, there is very little real-world need for gold. But as an investment tool, gold is king. Since the beginning of 2016, gold is up roughly 18%. The S&P 500, on the other hand, is up around three percent.

Gold remains bullish because it is used as a hedge against uncertainty. And there is a lot of uncertainty out there. The U.S. dollar is down almost five percent against a basket of 10 currencies because of its weak economic outlook. Precious metals like gold and silver have an inverse relationship with the U.S. dollar. When the dollar is strong, gold and silver usually fall. And when the U.S. dollar is weak, investors flock to precious metals.

Gold is also bullish because of weak economic conditions in China, Japan, Europe, Russia, and South America. There are also ongoing tensions in the Middle East fueling investors’ demand for gold.

Silver

Like gold, silver prices are also up since January 1, 2016. Trading at their highest level in almost a year, silver prices are up almost 24% year-to-date at US$17.00 an ounce. Silver prices are being driven higher by market volatility, economic uncertainty, geopolitical tensions, and a weakening U.S. dollar.

Oil

Despite concerns about an ongoing economic slowdown and a market saturated with oil, prices remain strong. Oil prices are up more than 50% since the middle of February near US$42.00 per barrel. Oil prices rebounded following somewhat encouraging news that the Organization of the Petroleum Exporting Countries (OPEC) and other major producers would freeze oil output.

But Saudi Arabia and Russia said they would only agree to a freeze in crude oil production if Iran and other major producers do, too. That seems unlikely—Iran wants to revive its oil industry after international sanctions were lifted.2

Oil prices remain solid right now, but that could change very quickly, especially in light of the fact that Saudi Arabia said it could nearly double production immediately to around 20 million barrels per day.3

At the same time, strong oil prices have helped lift the Canadian dollar close to the US$0.80 mark. Trading near US$0.79, the Canadian dollar is at its highest level since July 2015. Because oil accounts for a sizeable amount of Canadian exports, the loonie is highly correlated with the price of oil. The Canadian dollar is up right now, but if oil plunges to US$30 per barrel, you can expect the dollar to follow the same trajectory.

Learn-to-Trade.com: Leaders in Commodity/Futures Trading

A lot of investors avoid commodities trading because of the uncertainty of predicting future events that could impact underlying prices. Taking commodity trading courses from the licensed professionals at Learn-to-Trade.com will show you how you can profit with commodities trading.

Learn-to-Trade.com will help you learn about different commodity trading perspectives and strategies, and understand both short- and long-term trades, realistic exit strategies, and risk/reward management techniques. Because of Learn-to-Trade.com’s unique Lifetime Membership, you can re-attend any part of the program you like, as often as you like.

To learn more about Learn-to-Trade.com’s stock market trading course, contact us at 416-510-5560 or by e-mail at info@learn-to-trade.com.

George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members. Add me to your G+

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Steven R

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I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

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Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

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The course is amazing. Where were you 30 years ago?

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2014-08-20T10:34:39-04:00

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

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Hi George, I just wanted to thank you again for the amazing work on the tutorials especially Options trading. Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!

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